Correlation Between Lichen China and CRA International
Can any of the company-specific risk be diversified away by investing in both Lichen China and CRA International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lichen China and CRA International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lichen China Limited and CRA International, you can compare the effects of market volatilities on Lichen China and CRA International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lichen China with a short position of CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and CRA International.
Diversification Opportunities for Lichen China and CRA International
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lichen and CRA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International and Lichen China is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lichen China Limited are associated (or correlated) with CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of Lichen China i.e., Lichen China and CRA International go up and down completely randomly.
Pair Corralation between Lichen China and CRA International
Given the investment horizon of 90 days Lichen China Limited is expected to under-perform the CRA International. In addition to that, Lichen China is 9.5 times more volatile than CRA International. It trades about -0.32 of its total potential returns per unit of risk. CRA International is currently generating about -0.21 per unit of volatility. If you would invest 20,376 in CRA International on September 12, 2024 and sell it today you would lose (1,732) from holding CRA International or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lichen China Limited vs. CRA International
Performance |
| Timeline |
| Lichen China Limited |
| CRA International |
Lichen China and CRA International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lichen China and CRA International
The main advantage of trading using opposite Lichen China and CRA International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China position performs unexpectedly, CRA International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CRA International will offset losses from the drop in CRA International's long position.| Lichen China vs. Network 1 Technologies | Lichen China vs. Civeo Corp | Lichen China vs. BrightView Holdings | Lichen China vs. Maximus |
| CRA International vs. Franklin Covey | CRA International vs. ICF International | CRA International vs. Huron Consulting Group | CRA International vs. FTI Consulting |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |